The Asia-Pacific risk industry is rethinking its approach to climate change, driven by global initiatives encouraging climate-related financial disclosure and industry collaboration.

The Asia-Pacific risk industry is rethinking its approach to climate change, driven by global initiatives encouraging climate-related financial disclosure and industry collaboration.

The Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD), and the United Nations Environment Programme Finance Initiative (UNEP FI), have prompted the region’s insurers, brokers, and risk managers to strengthen governance, improve analysis, and work more closely together, industry figures say.

The TCFD was developed to help companies formally assess and disclose the financial impact of climate risk, amid concerns about the effects of climate change on financial stability. TCFD recommendations were finalised last June.

The UNEP FI is a long-running initiative between the financial sector and UN, aimed at encouraging sustainability. Earlier this year the UNEP FI’s banks and asset managers joined a pilot project to implement TCFD recommendations An effort is underway to bring insurance companies together in a separate pilot project.

The UN believes increased information sharing will help financial institutions understand and report climate-related risk, prepare them for climate change, and help the transition to a sustainable economy.

QBE is one of several companies to join the UNEP FI insurance industry TCFD pilot group, which launched over the past few months. The pilot group aims to bring the industry together to work on “the assessment and disclosure of climate-related risks and opportunities”.


QBE chief risk officer Peter Grewal says the insurer is “collaborating” with other companies on the pilot group and has also contributed towards the UNEP FI ESG standards for underwriting.

Grewal said QBE had taken steps to improve climate-related risk management throughout the company: “Over the next three years, our Climate Change Working Group will support the company to review and strengthen our governance around climate change, including undertaking more detailed analysis of our exposures to climate risk in various products, markets and investments, and ensuring our risk management processes incorporate consideration of physical, transition and liability risks arising from climate change.”

Grewal said QBE would also identify opportunities “to assist our customers as they navigate the transition to a lower carbon economy”.

Suncorp is also following the TCFD framework. Spokesperson Nadia Farha said the TCFD was “helping Suncorp and the industry assess and disclose the emerging risks, opportunities and financial implications climate change poses”.

She added: “We adopted the TCFD earlier this year and we expect many more insurers and other financial institutions globally to start using the framework. Addressing climate change not only makes good environmental sense but will enable our business to protect and enhance customer and shareholder value under various climate scenarios.”

Farha added: “It’s still early days for Suncorp and the industry, but we have been clear in our acknowledgement that climate change presents strategic and financial risks, and opportunities, for Suncorp and our community.”

Farha added Suncorp has a dedicated Climate Change Action plan: “We have committed to reducing carbon emissions across our value chain, building resilience in our business and the community, and playing our part in supporting the transition to a net-zero carbon emissions economy.”

Corporate risk managers say UN guidelines have helped them to develop climate change strategies. Victoria Tan, head of group risk management and sustainability at Ayala Corporation, said: “We anchored our sustainability philosophy and framework with the United Nations Sustainable Development Goals.”

She added: “In 2016, we launched our group-wide forest protection and reforestation project in Pagupdud, Ilocos Norte, Philippines. And our main objective is to mitigate our GHG emission as a group.”

Tan says Ayala is in the process of integrating sustainability risk into its annual risk assessment process. She said the company aims to work more closely with insurance partners: “We are also doing a group-wide natcat [natural catastrophe] modelling that will inform our 2019 renewal process.”

The climate change efforts come as this month’s UN Intergovernmental Panel on Climate Change (IPCC) report warned there is only 12 years to keep global warming at a maximum of 1.5C, and said urgent action was needed to reach the target.

A recent article from Risk Frontiers, the Asia-Pacific risk management and catastrophe modelling firm, said the Australian government was yet to adopt climate policy as quickly as the financial sector. Risk Scientist Thomas Mortlock said the IPCC report “exposed an interesting divide between sectors that have come to the fore in recent years – with banking, insurance and industry at large leading the charge in understanding climate change risk and exposures, and the federal government lagging”.

While collaboration and information sharing has improved between insurers, brokers, and risk managers,, Ayala’s Tan believes there is still some way to go in the battle against climate change: “The recent [UN] report on climate change is not encouraging and we need to work faster than before,” she said.